DON'T BANK ON IT

The smart-aleck title belies the responsible, informative text--in which the author not only documents how Canada's banking establishment and its federal overseers shortchange the public interest but also advances some modest proposals for reform--in the face of an inexorable trend toward electronic funds transfer (EFT) that could effectively foreclose freedom of financial choice. Granger, vice president of a Vancouver investment firm, reviews the system's major depository institutions: full-service chartered banks; trust companies; and credit unions. She pays particular attention to the dominant position of banks whose total assets are 3.7 times those of fiduciary and thrift organizations; further, just five institutions (the Royal, Montreal, Commerce, Nova Scotia, and Toronto-Dominion) control 87 percent of banking-industry assets and own a like proportion of the 7,500-odd branch offices blanketing the country. This concentration of economic power, Granger charges, permits or encourages such systemic shortcomings as: clubby commercial alliances in the form of interlocking directorates; undue influence over lawmakers and regulatory authorities; dilatory compliance with the Bank of Canada's monetary policy; frequently misleading promotional campaigns; and a determined effort to foist EFT on a reluctant but remarkably unresisting public. Unlike the US, Canada has no Truth-in-Lending Act on the books, and the consequent lack of standardized disclosure, Granger maintains, can create ""traps for the unwary,"" including severe penalties for prepaying debt. ""EFT is coming to Canada. . . in a legal vacuum,"" she asserts, adding that the technology poses grave threats to consumers' privacy and security from accidental loss or fraud. Chief architects of the brave new world are depository institutions which Granger accuses of persuading susceptible customers to overextend themselves financially. For the record, bankers' support of a cashless, checkless society emphasizes economic considerations; but there's no evidence, Granger asserts, to suggest that computer-based systems can or will contain, let alone reduce, the cost of retail financial transactions. To avert future shocks, she recommends greater involvement by the public in national financial planning; for starters, she urges a consumer affairs bureau for the Bank of Canada, modeled on that of the US Federal Reserve Board. In the meantime, hard bargaining and alert shopping for credit will have to suffice. A must for Canadian consumers, Granger's guide should also prove an eye-opener for any American who wonders about the next move of deregulated depository institutions in the Stateside money game.